Parents are paying the price for financial pressure on nurseries
PARENTS face soaring childcare costs as the Government’s controversial business rates review heaps financial pressure on nurseries, new research has shown.
Nurseries and play schools will have to stomach a 26% business rates hike to £110.72m per year until 2022, according to figures compiled for the Press Association by business rent and rates specialists CVS.
The National Day Nurseries Association (NDNA) said nurseries have no choice but to pass on the costs to parents or risk closure.
The organisation is calling on the Government to follow in Scotland’s footsteps and consider exempting nurseries from the tax.
Such a move would hand the industry a total tax break of more than half a billion pounds over the next five years.
It comes after a long-awaited business rates review in Scotland recommended nurseries should not have to pay the levy as part of efforts to boost free childcare.
NDNA chief executive Purnima Tanuku said: “The review in Scotland has recommended that nurseries be given an exemption to business rates.
“England and Wales should follow suit – particularly in England, where nurseries have the added financial burden of delivering 30 hours’ expanded childcare next month.
“Increasing business costs, including National Minimum Wage rises, mean many nurseries are struggling to stay in business and fees are rising for parents whose children don’t qualify for free hours.”
Analysis by CVS found that 11,204 nurseries and play schools had rateable value of £183.20m before the review, but have seen this rise by 32% to £242.54m under the new regime.
As a result, the sector will have to fork out an extra £23.1m per year until 2022 in order to meet the extra costs.
The revelation comes as a raft of small businesses saw the amount they pay rise – in some cases by 3,000% – when rateable values were updated earlier this year. New rateable values determine tax bills for the next five years and are based upon property valuations as of April 1, 2015.